Exxon Mobil and the precautionary principle

A recent poll conducted by the Civil Society Institute (CSI) and the Environmental Working Group found that the vast majority of Americans favor more political leadership when balancing domestic energy production with protecting people and the environment. This poll is interesting on many levels, primarily because of the overwhelming percentages of constituents who want more protections. But one aspect stood out because it is an argument heard over and over again from the oil and gas industry. It revolves around the precautionary principle.

The precautionary principle in essence states that if there is a chance of harm being done either to people or the environment from an activity and there is not enough scientific consensus or research, then policy makers should err on the side of caution and preclude the activity or heavily regulate it. It is a sensible approach but one which is all too often disregarded in the U.S. for the simple reason that lobbyists in Washington and state capitals have exceedingly deep pockets. Nevertheless in some places like the European Union, the precautionary principle is now a statutory part of law. And well it should be.

In the CSI press release, it was stated:

“80 percent of Americans think we “should get the facts first about health and environmental risks before the potential damage is done by energy production.” This “precautionary principle” approach is supported by 67 percent of Republicans, 82 percent of Independents, and 89 percent of Democrats.”

In April 2012, Fortune Magazine ran an article on ExxonMobil CEO Rex Tillerson in which Mr. Tillerson discussed the precautionary principle.

According to Fortune:

“Tillerson believes the discourse about shale has been hijacked and distorted…He argues that shale drillers are being held to an unrealistic safety standard. “What’s happened is the tables have been turned around now to where we have to prove it’s not going to happen…Well, that is a very dangerous exchange to get into because where it leads you from a regulatory and policy standpoint is to govern by the precautionary principle. And the precautionary principle will absolutely undermine the economy…If you want to live by the precautionary principle, then crawl up in a ball and live in a cave.”

Mr. Tillerson states that drillers are being held to “an unrealistic safety standard”. And yet, how can that be? The oil and gas industry is exempt from every major environmental statute in this country. They have not had to continuously improve technology to correct for pollution or environmental degradation in spite of the fact that other industries which have never been exempt from all major environmental protection laws have been forced to comply. Further the industry does have some pollution control devices which are estimated to pay for themselves in less than a year in most cases and yet they repeatedly refuse to implement them even on a local scale. XTO, a division of ExxonMobil, refused to use them near schools in Ft. Worth, Tx. to protect the children from toxic air emissions from drilling activities. And surely we aren’t going to still beat the dead horse about air emissions at drill sites being non-existent and/or completely benign when independent corroboration has confirmed the problem beyond a shadow of a doubt.

Mr. Tillerson next states that governing by the precautionary principle is “dangerous”. Dangerous to whom? Should people who live near drill sites not have a say in how their environment is impacted? Do they not have a right to clean air and clean drinking water and if there is any chance that such might be negatively impacted do they not have a right or indeed even a moral obligation to speak up? Is that not a basic tenet of democracy? Or is that precisely where we are headed with this discussion? Further it would seem that many of the concerns voiced by those who live in near proximity are well founded.

Fortune stated:

“…a search of Pennsylvania’s Department of Environmental Protection database shows that last year XTO was cited for 81 violations for its drilling activity in the Marcellus. And on Dec. 10, 2010, the company was fined $150,000 for “improper casing to protect fresh water.”

And what kind of absolutist statement is “the precautionary principle will absolutely undermine the economy”? Can it not be equally argued that ruination of aquifers will most decidedly undermine local economies of any region in which it might occur? Cities cannot survive without potable water. And oil and gas companies have not been overly generous in supplying people with water in places like Dimmock, PA., Pavilion, WY. or Weatheford Tx. regardless of an admission of fault. Can a significant increase in VOC’s from shale gas drilling activities not also detrimentally impact a region’s economy due to missed days of work from respiratory illness and perhaps even cancer? We know that the children of Tarrant County, in the heart of the Barnett shale, now suffer from asthma rates which are the highest in the nation at 25%. And the Texas Commission for Environmental Quality has confirmed that drilling is contributing 42% more VOC’s, including carcinogens, than all on-road mobile sources in the Dallas Ft worth region. That is significant pollution. So whose economy are we talking about here?

Mr. Tillerson concludes his statement with the astonishing and somewhat inelegant opinion:

“If you want to live by the precautionary principle, then crawl up in a ball and live in a cave.”

To “crawl up in a ball and live in a cave” implies a certain withdrawal from reality. And yet, the “‘precautionary principle” approach is supported by 67 percent of Republicans, 82 percent of Independents, and 89 percent of Democrats.”‘

So just who is living in a cave?

Moreover, Mr. Tillerson feels that his industry is being treated disrespectfully. He opined:

“What I find interesting about the U.S. relative to other countries is in most every other country where we operate, people really like us. And they’re really glad we’re there. And governments really like us. And it’s not just Exxon Mobil. They admire our industry because of what we can do. They almost are in awe of what we’re able to do. And in this country, you can flip it around 180 degrees.”

Unfortunately, it is equally awesome to have the ability to destroy entire aquifers with one mistake or to decimate cities or regions or even humble homes when left without potable water. It is also awesome to “create” air full of carcinogenic material. It would be the height of ignorance to disregard such awe inspiring potentialities and push ahead with no consideration of possible consequences. In fact, to my mind, that is much more emblematic of “crawling up in a ball and living in a cave”.

The precautionary principle, however, does inconveniently disregard any substantial energy executive bonus and, of course, earnings per share. So perhaps now we are hitting closer to the nerve.

At any rate, it is much more probable that a capricious disregard for our environment will come to haunt us as our finest example of a Stone Age mentality. And it won’t matter one iota how much we like Rex Tillerson and ExxonMobil.

Deborah Lawrence (formerly Deborah Rogers) worked as a financial consultant for several major Wall Street firms, including Merrill Lynch and Smith Barney. Ms. Rogers was appointed as a primary member to the U.S. …

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